Vitalik Takes Apart Deconomy Bitcoin Talk in Live Tweetstorm

Vitalik Buterin, the co-creator of Ethereum, took apart a Deconomy talk about Bitcoin on Twitter. The talk was titled “Bitcoin, Controversy over Principle”.

Here’s what he had to say (for tweets missing from the list see the original thread on Twitter or [here][tw2]).

1. It’s interesting how much times have changed by 2018; even @Excellion (Blockstream CSO)’s presentation explicitly makes concessions to the non-maximalist multi-blockchain reality (“lightning compatible with Litecoin”, “Simplicity will be usable on Bitcoin+ other blockchains”)

Blockstream, the company which patented some Bitcoin technologies and is now pushing the Lightning Network as a solution to Bitcoin’s scaling problem has accepted that Bitcoin is no longer the only blockchain which makes sense (i.e. the maximalist’s view). Vitalik says that in the talk, they seem to have realized that the future will be built on co-existence and collaboration of multiple blockchains.

2. The whole “collectibles, then gold, then fiat, then bitcoin” narrative is only one way of understanding the history of money, and in many significant ways an incorrect way. See: David Graeber’s “Debt, The First 5000 Years”

The following two tweets focus on his discarding of the speakers’ claims about the history of money. They say that the history always went from collectibles, to store of value, to medium of exchange, to unit of account. Vitalik claims this is incorrect and cites the book Debt as a good source of accurate information on the topic.

4. “Monetary policy determined by user consensus” …. “set emission rate and provably finite supply” – isn’t that a contradiction? That said, good to see the emphasis on social agreement rather than “backed by math”; I think that’s philosophically the right step forward.

We’ve written about the false finiteness of Bitcoin before, and we’ve also covered the ability of miners to simply change the total supply of bitcoin and their emission and other properties in this post, so we don’t agree with any claims about that.

5. “Why Bitcoin is Better than Gold” – I actually agree Bitcoin is better than gold as an SoV both individually and socially; I harp on bitcoin PoW mining wrecking the environment a lot, but gold is worse. https://t.co/3GNPECdMYo

Vitalik furthermore claims that Bitcoin is a better store of value than gold, which we can only partially agree with. In regards to mining, sure, gold is much worse than Bitcoin right now. But as a store of value, gold will persist in an offline world and there’s no way for a company like Blockstream to declare it worthless. Bitcoin has been empirically proven to have been sabotaged internally and has been functionally useless since RBF (replace by fee) has been implemented, which alienates merchants.

We have to keep in mind that when the global economy collapses, both will be worthless. As far as current store of value is concerned, gold has still proven to be a better choice if we consider the people who were remortgaging their houses to buy Bitcoin when it was at $19000.

6. Why the emphasis on the ability to move $400m quickly? I personally am more interested in the ability to move $40 quickly; economic freedom for the common people and all that.

7. “Bitcoin is divisible and spendable”…. umm, I don’t think it’s possible to spend less than ~10000 satoshis. Sure, you can use lightning channels, but entering a channel itself costs that amount, so you can’t collect a payment for the first time if it’s smaller

It’s only logical of Vitalik to wonder why transferring $400m should be touted as an advantage of BTC. We agree with this completely. Those with 400 million to transfer will always find a way, but those who need to send smaller amounts, the unbanked billions, are the people who will most benefit from a decentralized and usable financial system.

Next, Vitalik expresses his opinion that Bitcoin is not divisible or spendable on goods in amounts under 10k satoshi – he believes it’s impossible to spend less because of transaction costs and that even if the broken Lightning Network is used. The LN will be explained in an in-depth post soon, but the gist of it is that you need to pen a “channel” with a central bitcoin bank which forwards the money along a route, like in a traditional banking system. This would speed up and cheapen transactions at the cost of privacy.

The following tweets weren’t as important, until Roger Ver, Bitcoin Cash’s advocate, took the stage.

13. That said, it’s mandatory to note that the economic freedom narrative does have caveats. Roger showed the growth of Hong Kong from 1950 to 2010 (super impressive) compared to Havana (lol).

15. Though the general “more economic freedom = good” idea is certainly one that I subscribe to. That said, there is a difference between the kind of economic freedom that is the difference between Cuba and HK, and the kind that bitcoin/crypto enables…

In this, Roger showed how much Hong Kong grew compared to Havana, stating that economic freedom is responsible for such progress. Vitalik was quick to recognize the importance of economic freedom, but also jumped on the fact that correlation does not equal causation – Shenzen (mainland China) grew just as much as HK but is far less economically free.

18. “This will result in fewer users … less financial privacy … less censorship resistance”. The financial privacy bit may actually be true; I heard from third-party sources that bitcoin tumblers were the first type of transaction to stop taking place as fees started going up

20. The thing I dislike about the presentation is that it doesn’t actually engage any of the arguments in favor of the small block position. I would really want to see some deeper discourse that actually gets into pros and cons of both sides and acknowledges that they exist

Roger spent the rest of his talk throwing dirt at small-blockers (the people behind the original Bitcoin chain which kept the block limit small), but didn’t give concrete arguments – something that bothered Vitalik, him being technical and highly mathematical. But Vitalik does agree with the notion of small blocks harming privacy – tumblers are services which mix up bitcoins in one pool and send them out in different ratios to different addresses to mask their origins. With expensive transactions, it’s only natural for them to suffer.

Craig Wright took to the stage afterwards. Craig claimed to be Satoshi Nakamoto on several occasions, but has failed to prove it. Vitalik didn’t hold back in denouncing all of Craig’s claims and calling him a crazy bullshitter.

21. Craig Wright begins: “We’re going to talk about the lies”

“Samson said that money was used first in barter and as a store of value – BULLSHIT!”

Then proceeds to brag about how many university degrees he has….. eh, at least he read Graeber.

After having taken Craig’s arguments apart in a superficial but aggressive way (we hope to see a more thorough takedown on Vitalik’s blog soon), a panel between Jeff Paik, the founder of Finector, Roger Ver, and Samson Mow, the CSO of Blockstream begins.

45. “It’s easier to migrate from bitcoin core to altcoins than to migrate from bitcoin core to lightning” – this is actually a very interesting point: lightning only benefits from bitcoin’s currency network effect, NOT tech/development network effect.

This is a really important tweet. It’s easier to move to an altcoin than to use the Lightning Network if Bitcoin’s original approach is no longer working for you. To use the LN, one needs to open a channel and send money into it. To take some money out, the channel needs to be closed. Both opening and closing a channel requires a transaction, and transactions currently take at least 10 minutes to confirm and that’s only if the service you’re connecting to is happy with a single confirmation. Most require 6 which is an hour of waiting on each end. It’s easier to use services like Coinvendor.io or Shapeshift to exchange to an altcoin and then go to Bitcoin or fiat as needed.

That said, I am more on the core side on the replace-by-fee issue. Relying on miner altruism is dangerous. That said, I think BCH should just hard fork to cut block times down to ~15 seconds and adopt GHOST.

This is a surprising one – Vitalik suggests adopting Ethereum’s mining schedule of 15 seconds per block with the GHOST protocol, which basically amounts to having Uncle rewards. What this means is that when two valid blocks are mined but one is included in the blockchain before the other, the miner that mined the other block will still get a block reward, just not as big as the main reward. This consolation prize keeps simultaneous mining of valid blocks non-wasteful and fair.

58. Roger’s argument: the core devs diverted the project and shifted the vision in ways that many of its constituents disagree with (“store of value”) and belittled and censored them, so of course people are upset.

Surprising no-one, Vitalik again confirms his stance that Blockstream hijacked Bitcoin’s original direction with their questionable engineering practices and censorship on Reddit and other platforms. The Lightning Network in its current state requires a fundamentally broken original Bitcoin, otherwise no one would use the LN. At the same time, Vitalik points out the lunacy of infighting and this Bitcoin / Bitcoin Cash holy war. Each chain is its own and each is growing in its own direction – the problem is the brand name. Both Bitcoins want the throne so it’s their “duty” to accuse the other of fraud.

Bruno has a Master's Degree in English Language and Literature and Computer Science, and has been in web development and publishing for over a decade. He's been in the blockchain space since 2015. He's an avid board gamer and VR enthusiast - find him on Oculus and Steam as TheSwader. He frequently rants on Twitter.